Car insurance premiums keep going up...

Car insurance premiums are set to hit almost $2,500 before next year, a spike from 2023 fueled by elevated vehicle prices and repair costs.

Big picture: The average car insurance rate has already risen 15% in 2024 to an annual price of $2,329. But insurance marketplace Insurify estimates that costs will continue to skyrocket throughout 2024.

• Premiums are forecast to cost $2,469 annually by 2025, 22% or $450 more than in 2023.

• In Maryland, where premiums are the highest, the cost of full coverage could reach as high as $3,748 in the coming months, $300 more than the June average of $3,400.

• Insurance costs have been rising faster than the cost of other goods and services. Last summer, the Bureau of Labor Statistics estimated insurance premiums were rising at a pace of 17%, compared to the average inflation rate of 3%.

Driving the news: Multiple factors are contributing to the rise in insurance premiums, the biggest of which is repair and maintenance costs.

• Although auto prices are slowly starting to decline, service expenses are still high, increasing the money insurance providers must pay. The Consumer Price Index indicates that the average repair and maintenance cost has risen 38% since 2019.

• Weather events, especially in high-risk areas, are also driving up prices. Hail has been especially troublesome, representing more than 10% of all car insurance claims last year.

Bottom line: High insurance costs place additional strain on consumer wallets, making it more difficult to justify vehicle purchases. Even if car prices continue to drop, factors like this mean that affordability could stay out of reach for some buyers for the foreseeable future.

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